SAN DIEGO — Executives with a new subsidiary created by the National Association of Realtors to build a national property database are facing some skeptics and critics as they hold briefings on the product at NAR’s annual conference.
The database is expected to eventually include records on every parcel in the U.S., residential and commercial, combining public property records with data from multiple listing services (MLSs) and commercial information exchanges (CIEs).
Some MLS executives attending the conference say they want additional assurances that it won’t compete with services they offer. In addition, some NAR members — particularly appraisers — aren’t happy that the project’s business model relies on selling automated valuations to lenders and government agencies.
Some skeptics at the conference have even referred to the Realtors Property Resource database (RPR), as "Reaper" — as in the Grim Reaper — fearing its potential to harm their business.
Because it will not include offers of cooperation and compensation, and will only be accessible to NAR members, the database won’t function as a national MLS, NAR says. Not all are ready to take NAR’s word for it.
"I have to say, that is a very fancy MLS you have there," Cameron Paine, chief executive officer of Connecticut Multiple Listing Service Inc., said jokingly after a demo of the new database for NAR members Saturday, one of more than a dozen presentations planned during the the annual conference.
While NAR has been talking about creating a national property database for more than a year, some members were caught by surprise by the implications of last week’s announcement that the Realtor association had formed a subsidiary, Realtors Property Resource LLC, and purchased technology and licensed data from LPS Real Estate Group, the operator of Cyberhomes.com (see story).
By acquiring much of the technology behind Cyberhomes.com — a consumer-facing valuation site that, like competitor Zillow, is distrusted by some Realtors — NAR is getting into the valuation business.
When an RPR executive, former Michigan real estate broker Jeff Young, briefed members of NAR’s Appraisal Committee Friday, appraiser Joe Traynor complained that "most of us are hearing about this for the first time."
"I’m a little insulted" about not being kept in the loop, Traynor said. "Nobody though about how it affected the people in this room (appraisers)."
Although access to the RPR database itself will be restricted to NAR members, NAR hopes to sell analytic products derived from the database — including "Realtor valuation model" (RVM) property valuations — to lenders and government agencies.
If multiple listing services contribute active and sold listing data to RPR, backers say, that data can be used to generate valuations that are more accurate than automated valuation models (AVMs) that rely primarily on public property records. Those records are often not as current as MLS data and can lack detail.
RPR executives say RVMs will become the "gold standard" for property valuations, and that lenders, government agencies and Wall Street investors have already expressed interest in purchasing data from the company. …CONTINUED
LPS Real Estate’s parent company, Lender Processing Services Inc., currently generates $200 million to $300 million a year revenue selling analytic products, said Dale Ross, RPR’s chief executive officer. With LPS Real Estate marketing the new RVM product through its existing marketing channels, there’s a potential for RPR to generate $60 million to $80 million in annual revenue, Ross said.
NAR projects it will cost more than $20 million to get the Realtors Property Resource off the ground — an initial $12 million outlay for technology and licensing, and $9 million to cover losses in the first three years of operations — with the business becoming profitable by 2012.
Revenue from sales of RVMs and other analytical products will allow RPR to provide NAR members with access to the database at no charge, through a sophisticated interface that will allow them to generate customized reports for clients, said Marty Frame, the former Cyberhomes executive who has moved over with most of his team to RPR LLC, where he serves as president.
Non-NAR members will only be allowed to purchase analytic products derived from the database, like RVMs. But because the database can only generate RVMs in markets where MLSs have agreed to contribute listings data, MLS participation is vital.
"My understanding is this depends on MLS data," Connecticut MLS’ Paine asked Ross Saturday at a packed meeting of NAR’s MLS Issues and Policies Committee. "Why has no one asked to use our MLS data until now? If the millions (NAR is) spending rests on the success of this product (the RVM), and nobody has asked for our data up to this point, that seems like a weak link in the plan."
RPR "will not be successful without MLS data," Ross agreed. Although MLS executives served on the advisory committee that has been developing RPR over the last 18 months, "this has been the first opportunity we’ve had to ask you for your cooperation," he said.
Ross said the RPR project took on a new direction after NAR — which had already hired Realtor.com operator Move Inc. to build a front-end for the system — put out requests for proposals to the two biggest public records data aggregators to supply data on the back end.
Although Ross said one company, First American Corp., was only interested in selling NAR property records, LPS came back with a much more substantive proposal that, after weeks of negotiations, resulted in the deal announced Monday.
Ross said NAR general counsel Laurie Janik is still in the process of drawing up the licensing agreements by which RPR will seek to enter into data sharing agreements with MLSs and CIEs. He said RPR intends to begin signing MLSs on to the project in December.
Steve Blanton, chief executive officer of the Southern Oregon MLS, said he wanted to know if the licensing agreement would include a non-compete clause. Ross said he thought it could: "Whatever we can do to make (participants) comfortable."
As an incentive for their participation, MLSs will get access to RPR’s public property records they can make available to their own members through an application programming interface (API), which Frame said will be ready by January. …CONTINUED
Ross said RPR has a 50-50 revenue-sharing agreement with LPS Real Estate. Asked if RPR had considered a revenue share with MLSs in exchange for their listing data, he said that’s not an option, for now.
RPR is a startup company that’s expected to be a money-losing proposition for four to five years, he said, and NAR will expect a return on its investment first. It’s unclear what RPR’s revenue numbers will be, but if the company is "very successful" Ross did not rule out revenue sharing with MLSs down the road.
NAR is touting the RPR database as a valuable benefit for members. After watching Frame put the database through its paces using an application that’s still in development, Austin, Texas-based Realtor Jeanne Butterfield, said, "I am just a little grain of sand on the beach. But as an agent, why do I need your Zestimate or AVM?"
Butterfield said she already has the ability to produce a more accurate comparative market analysis, or CMA, herself.
Frame said the RPR will be unique in that it will be the first time public property records and other data have been combined with current and historic MLS data into a national database. RPR will provide a number of tools and a wealth of data that Butterfield probably doesn’t have access to today, Frame said.
But Butterfield said she viewed RPR’s business model of selling analytics to lenders as "selling me out" to Wall Street.
"If those other companies are there with the analytics, where is the agent?" Butterfield said.
Frame said that when lenders and other companies order AVMs that are based on public property records today, "the agent is not in the picture." The goal of RPR is "to put the agent in the center of the process," he said, by factoring the data they enter into the MLS into property valuations.
That NAR is getting into the valuation business particularly rankles some appraiser members.
After Young provided an overview of RPR for NAR’s Appraisal Committee Friday, he faced a barrage of questions about its impact on appraisers.
St. Petersburg, Fla.-based residential appraiser Frank Gregiore noted that while the RPR advisory board included representatives of MLSs, appraisers weren’t included in the process.
Although Gregiore said he understood that RVMs "got slipped in there" when the RPR ended up on a different path, appraisers who are dues-paying NAR members shouldn’t have been left in the dark.
"There are other AVMs out there," Gregoire said. "But we don’t pay dues to anyone else making an AVM. That’s part of the reason we’re (upset)."
Gregoire said he worries that loan originators and secondary market investors "would just as soon pay $5 or $10 for something we would charge $400 or $500 to do."
Young promised a greater role for NARs appraiser members as the project moves forward.
RPR executives publicized a phone number, (888) 914-7771, and an e-mail address, firstname.lastname@example.org, for NAR members to provide feedback.
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